Allard Enterprises, Inc. v. Advanced Programming Resources, Inc.

• Decision Date: 04 June 1998
• Docket Number: No. 97-3417,97-3417
• Citation: 146 F.3d 350
• Parties: ALLARD ENTERPRISES, INC., d/ b/a/ Allard Programming Resources, Plaintiff-Appellant, v. ADVANCED PROGRAMMING RESOURCES, INC., and Barry Heagren, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 350

146 F.3d 350

46 U.S.P.Q.2d 1865

ALLARD ENTERPRISES, INC., d/ b/a/ Allard Programming Resources, Plaintiff-Appellant, v. ADVANCED PROGRAMMING RESOURCES, INC., and Barry Heagren Defendants-Appellees.

No. 97-3417.

United States Court of Appeals Sixth Circuit.

Argued April 22, 1998.

Decided June 4, 1998.

Gail L. Morrissey (argued and briefed), Standley & Gilcrest, Dublin, OH, for Plaintiff-Appellant.

Timothy E. Miller (argued and briefed), Joanne S. Peters (briefed), Isaac, Brant, Ledman & Teetor, Columbus, OH, for Defendants-Appellees.

Before: KENNEDY and BATCHELDER, Circuit Judges; HULL, District Judge. ^*

OPINION

KENNEDY, Circuit Judge.

Plaintiff Allard Enterprises, Inc. ("Allard Enterprises") sued Advanced Programming Resources, Inc., and its sole shareholder, Barry Heagren, (collectively "defendants") in the United States District Court for the Southern District of Ohio, alleging federal claims of trademark infringement and false designation of origin, and state law claims of trademark infringement, unfair competition, and deceptive trade practices. Defendants filed a counterclaim alleging similar state law claims and a federal false designation origin claim against plaintiff. Their dispute arises from plaintiff's use of the mark "APR OF OHIO" in connection with the placement of employees with computer and data processing skills and defendants' use of the mark "APR" in association with similar services. The parties stipulated that their service marks were confusingly similar and consented to trial before a United States magistrate judge, who determined that defendants first used the mark in commerce and permanently enjoined plaintiff from continuing to use its service mark. Plaintiff now appeals. For the following reasons, we affirm the trial court's priority determination, vacate its order granting injunctive relief, and remand this case for further proceedings.

I. Factual and Procedural Background

This controversy arises from the parties' competing uses of service marks containing the acronym "APR." To understand their claims, it is necessary to trace the evolution of the strikingly similar marks at the heart of this dispute. In the early 1980s, defendant Heagren owned half of the stock of Advanced Programming Resolutions, Inc. ("Old APR"), a company that placed employees in computer and data processing jobs and used the mark "APR" in connection with its services. Towards the end of 1986, Old APR entered an agreement to sell its stock to another company, AGS Information Services, Inc. ("AGS"). In December of 1988, after a two-year buyout period, AGS discontinued its use of the APR mark. During this period, Heagren worked for AGS, as did Charles Allard, who was hired as a comptroller. On January 31, 1989, Heagren incorporated a new company named Advanced Programming Resources, Inc. ("New APR"), yet continued to work for AGS. Heagren's activities with this new company lie at the heart of this dispute.

In 1993, Heagren and Allard learned that AGS was being sold to Keane, Inc. Charles Allard learned that his position with the company would not survive this transition and left AGS on December 1, 1993. Allard and his wife Linda Allard decided to create their own business that would refer employees with computer programming and data processing experience to potential employers. On January 20, 1994, they incorporated Allard Enterprises, Inc. and registered "Allard Programming Resources, Inc." as a trade name with the Secretary of the State of Ohio. Allard Enterprises unsuccessfully attempted to register the trade name APR, because APR was registered to AGS, via its successorship to Old APR. On April 29, 1994, Allard Enterprises was allowed to register the trade name "APR OF OHIO" with the Secretary of State of Ohio.

Heagren left Keane on May 13, 1994, and began working full time with New APR. At this time, he apparently believed, based on inaccurate advice from legal counsel, that New APR owned the rights to the trade name APR. On March 15, 1995, Heagren's attorney advised Charles Allard by letter that New APR considered Allard's use of the mark APR OF OHIO to infringe on New APR's protected use of the APR service mark and demanded that Allard cease and desist from using its APR mark in the marketplace. In response, Allard Enterprises filed an application, dated March 30, 1995, with the United States Patent and Trademark Office for federal registration of its APR OF OHIO service mark, claiming that it first used the mark in connection with its services "at least as early as April 30, 1994." On March 31, 1995, Allard Enterprises responded to the March 15 letter from Heagren's attorney and denied that Heagren had any rights to the APR mark. On June 25, 1996, the Official Gazette of the Patent and Trademark Office published the APR OF OHIO mark, and on September 17, 1996, the service mark APR OF OHIO was registered to Allard Enterprises on the principal register of the Patent and Trademark Office.

Meanwhile, Heagren learned that the service mark APR actually was registered to AGS, not New APR. In response, Heagren and New APR unsuccessfully tried to register both the APR mark and the APR of Ohio mark with the Secretary of State of Ohio. On September 5, 1996, plaintiff brought this action in the United States District Court for the Southern District of Ohio. On September 24, 1996, plaintiff filed an amended complaint that alleged a claim of federal trademark infringement under 15 U.S.C. § 1114, a federal false designation of origin claim under 15 U.S.C. § 1125(a), a common law trademark infringement claim, an unfair competition claim, and a deceptive trade practices claim under Ohio Revised Code §§ 4165.01-4165.04. Defendants' answer to the amended complaint included a counterclaim alleging one count of false designation of origin under 15 U.S.C. § 1125(a), one count of common law service mark infringement, one unfair trade practices count, and one count of deceptive trade practices under state law. Both parties sought injunctive relief preventing the other from using its service mark.

Upon consent of the parties, the District Court referred the case to a United States magistrate judge for final disposition. After a bench trial, closing arguments, and post-trial briefs, the magistrate judge issued findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure. Because the parties stipulated that the marks APR and APR OF OHIO were confusingly similar, the central issue before the trial court was which party first used its APR mark in commerce. Although Allard Enterprises' application for federal registration of the APR OF OHIO service mark claimed that it first used the mark "at least as early as April 30, 1994," the court found that Allard Enterprises actually first used the service mark in commerce on March 30, 1994, when it sent out a mass mailing to 100 potential customers. It concluded, however, that Heagren had used the APR mark in commerce prior to that date.

The trial court supported this conclusion with findings of fact that chronicled Heagren's business activities after AGS abandoned the APR mark. It found that while Heagren was working for AGS, which was engaged in the placement of contract, or temporary, workers, he worked part-time for New APR, which was engaged in the placement of permanent workers. Although Heagren would have been prohibited from working independently in the contract employee placement business by an agreement not to compete with AGS, the court found that Heagren believed that he was not precluded from attempting to place permanent employees in the computer and data processing fields. It then identified several instances that showed Heagren used the APR mark when he solicited business for New APR from employers who might be interested in hiring permanent employees. The earliest of these came in 1991, when Heagren told Vincent Carter, who worked for AT & T, that he was doing permanent placements through New APR. This contact, however, did not lead to any business. In 1993 and 1994, Robert Sheehan, who had known Heagren since the 1970s, gave Heagren his resume and asked Heagren to help find him a job. In 1994, the Ohio Department of Liquor received Sheehan's resume from either New APR or Heagren, and eventually hired Sheehan.

Tom Norman testified that he contacted Heagren in 1993 seeking assistance in finding a new job. Heagren and Norman met at least twice and had approximately one dozen conversations regarding Norman's job search. The court found that Heagren contacted Riverside Methodist Hospital, WEC Engineering, and Blue Cross of Central Ohio on behalf of Norman, and arranged interviews for him at the first two of these potential employers. The trial court credited Norman's testimony that "when interviewed by WEC Engineering, ... the interviewer's copy of his resume bore the name 'APR.' "

According to the trial court's findings, Heagren also arranged interviews for Mike Greely, who previously worked for Old APR and AGS. Greely testified that he "saw [Heagren] in 1993, early fall of '93, while I was employed at the State, and we chatted briefly. And [Heagren] told me that he was doing permanent placement under APR, and I had asked him to help me find a permanent position at that time." Although Greely interviewed with Nationwide Insurance and a company called Highlights for Children, APR's efforts did not lead to a job offer. In 1993, Heagren also represented Richard Behrens, another employee of Old APR, in his search for a permanent job. Behrens produced a copy of his own resume with a header bearing the APR logo for Heagren to use in his job search. Heagren talked to a number of companies on behalf of Behrens, and Behrens testified that this resulted in two interviews. The trial court determined, however, that there was no evidence that Behrens' resume bearing the APR logo was ever distributed to a...